fixed mortgage rates, and the Bank of Canada.

by Steven Axford

This morning, the US Consumer Price Index (CPI) came in lower than expected at 3%. This could have an effect on fixed mortgage rates, and the Bank of Canada.

This most recent inflation reading has increased the likelihood that the US Federal Reserve – the American counterpart to the Bank of Canada – could cut its benchmark interest rate as early as September. North of the border, that could mean another rate cut for Canadians in July, as the Bank of Canada reacts to positive inflation news.

As a result, bond yields have trended lower, which is putting downward pressure on fixed mortgage rates. Here’s what all of this means for Canadian borrowers and rate shoppers:

What does this mean for you:

Shop for fixed mortgage rates: Lenders base their pricing for fixed mortgage rates on bond yields, which lowered to the 3.3% range following the CPI report. If this persists, it could mean lower fixed mortgage rate options will be available over the coming week.